T-bone1

+1

Agree, this is a great event for a great cause and we are all lucky that Sanjeev and Alnesh put it on! I'm genuinely puzzled as to why "politics" was listed as a reason not to go, but maybe I wasn't paying enough attention at last year's dinner...

So you are saying it's like having a long-term below-market lease on a K-Mart??? :-)

Does anyone have any good suggestions of a well-structured and low cost fundamentally-weighted index or ETF? Thanks!

A few anecdotal observations fwiw: In the beginning (market down 20%) it was very easy to double down on things. There was a general perception that the government would step in and that the "greenspan put" protected the downside. Towards the bottom, it was very difficult to double down on things and we (like many value investors) were only allocating funds towards distressed fixed income investments that we were sure were "money good" under a very wide range of outcomes - because at the bottom the range of possible outcomes seemed very wide indeed. I think the Bear Stearns bankruptcy really shocked a lot of people - up until that point in the cycle you could do no wrong buying something at 25% of "tangible book value"... and then a lot of people lost 90% overnight doing just that. That led to the type of mentality that allowed Klarman to buy AIG paper a few days from maturity for half off (doubling his money in a few days). In general it sucked... the opportunities were great and we made money coming out of it, but it is a whole different world when things go down 80% (once in a lifetime bargain!!!) but you know they might go down 90% (you just lost half your money in a month!!!). Given the above, I'm not sure how to really do things differently. Knowing what I know now, I think I would still take the safe 40% IRR in fixed income, but possibly adding 10-15 1% positions across industries in highly distressed equities (knowing they might go down another 50% the following week).

FFH is much less hedged currently than they have been in the past - particularly with regard to the massive fixed income "hedges" they held in 2008. Even in 2008, the stock went down initially even as the intrinsic value was soaring - you would have been better holding cash.

You might want to take a look at what PGN looks like in 2016 and 2017... they have some very high priced contracts rolling off and their rigs are more likely to be scrapped than re-contracted over the investment horizon before this company goes BK

FWIW, it is well known within the fusion community that the NIF at Livermore is only being funded/used to simulate the decay of our stock of hydrogen bombs, because we cannot currently test hydrogen bombs due to the test ban treaty (thank goodness!). No one expects anything worthwhile with regard to practical fusion to come out of NIF... unfortunately they suck all the funding out of otherwise promising branches of the field

I think Elon Musk has set a great example in SpaceX for how fusion (or more accurately fusion research) could be accomplished for a much cheaper price tag. Basically, the science is all done and now it is a question of engineering (akin to knowing how to make a rocket conceptually, and then actually building one that will work). ITER is a $27 billion (and counting) science experiment that will basically move the ball down the field. Other researchers are having some success with Stellerators and work on spherical Tokamaks looks promising. What we need is someone like Buffett/Gates or Lockheed to build an ITER type machine for $2 billion rather than $27 billion (Musk was able to source many equivalent parts from non-rocket contractors for 1/20th the price). The problem - as I see it - is that the government is the only person working on projects with a 10 year+ payoff and the government is incredibly inefficient. Probably the best chance of success is that China throws a few billion a year at this as a hedge against importing oil for the next 50 year... I can't think of anyone else willing to spend a few billion without a return, while also getting something done on-time and with a reasonable budget. We probably need to build 3-5 ITER type experiments before we get a working Fusion reactor, and at the current pace we are building one every 15-20 years... (and you have to build them one at a time so that the next model can be improved upon based on what was learned from the last iteration).

Don't forget "Munger's Folly", the huge trimaran yacht that he basically supervised construction of after creating a company to build it for him

Are you asking for a friend Sanjeev? Or rolling up the industry? ;)

If you read Soros' 13F, he has hedged about 17% of his portfolio with puts on the S&P. . . this probably cost less than 1% of the portfolio. 13F filings always report the notional value, which confuses people (see some past SHLD 13F filings). Soros also held calls on the S&P with a notional value of 5% of his portfolio. It looks like he is basically hedging and betting on more volatility. Another way to look at this is that he is going to "keep dancing" like Drunkenmiller said he was going to do in his last interview ("the difference is I can get out... the central bank can't") Have a good weekend.

Haha is this a serious question? We certainly like FST, but end of the week is an awfully tall order...

I would add a question that perhaps Sanjeev can answer: Who if anyone is (effectively) the chief investment officer? Is this Prem and if so, does he have time to do this while growing his operating businesses? Cundill, among others, has talked about the danger of investing by committee. I could be way off base here, but it just seems like a lack of focus in their investing . . . It made a lot of sense when Prem said they were buying quality businesses for the long term (KFT, JNJ, etc.) in 2008 . . . it made a lot less sense when they started buying over-levered crap after that and hedging with the Russell . . . These guys individually and collectively have great long term records and I have benefited from their investing prowess as a shareholder in the past. I'm just trying to understand their current investment process now: 1) Is Brian in charge of Macro? He has done this better than anyone in the past, but is this an official designation? Do they have any sort of designated "devil's advocate" to argue for inflation in their investment meetings? I've had very worthwhile conversations with some of the guys from Hamblin Watsa about this, but they seem disturbingly all on the same page. 2) What is the goal of their energy investments? Are they trying to get exposure to cheap natural gas, use this as an inflation hedge, or do they just see SD and XCO as great investments. Do they talk to consultants or have anyone from the field actually look at these assets before they buy them? 3) Is it a policy to focus some portion of the portfolio on Canadian investments? If so, they should make this official. The fact that they elected to pay the Abitibi/Bowater pensions in full (when the Unions were prepared to take a large haircut in Bankruptcy) is more disturbing than the BBRY investment in my book. Overall, their investments just seem disorganized. MKL has one guy at the top, BRK has two and then Todd and Ted below them. FFH has what? A committee at Hamblin Watsa along with an unofficial group of former employees, friends and business partners? Regardless of the quality of all of the people involved, it would seem they would be much better served with some sort of clear and concise investment philosophy, framework, and medium term allocation.

I would say specialty insurance by a mile. As a general example, take insurance on classic cars. People who own classic cars tend to be wealthy and place a lot of importance on these vehicles, so they are willing to "pay up" in terms of premiums. These people also tend to drive slowly and carefully and are generally super careful of anything happening to these cars, so they have much much lower claims rates. I believe yacht and private aircraft insurance is similar, where the vessel is professionally maintained and piloted, but of enough importance to the owner that insurers can charge a high premium. I expect pet insurance is also very lucrative.